BitGo sues Galaxy Digital for $100M- deciphering the reasons
Cryptocurrency custody firm BitGo has sued cryptocurrency financial services firm Galaxy Digital, seeking more than $100 million in damages for allegedly violating its $1.2 billion merger. The lawsuit has been filed in the Delaware Court of Chancery.
Galaxy Digital Announces Deal
It was in May of last year that Galaxy announced its intention to acquire BitGo to provide cryptocurrency trading services to institutional investors.
The deal was expected to bring 400 new customers to Galaxy Digital. An aggregate transaction value of approximately $1.2 billion was established at that time.
Galaxy Digital had decided to retain BitGo employees, in addition to offering employment agreements to members of the management team. At the time, the deal was expected to close in the fourth quarter of 2021.
But in August this year, Galaxy Digital announced the termination of its agreement to acquire BitGo, as it stated that BitGo had not delivered audited financial statements for 2021 by July 31, 2022. It also said that the termination will not incur the company no charge.
Mike Novogratz, CEO and founder of Galaxy, said the company remained committed to continuing its process to list in the United States.
The statement also revealed that Galaxy intended to complete its proposed reorganization and domestication to become a Delaware-based company and list on Nasdaq upon completion of Securities and Exchange Commission (SEC) review and subject to SEC approval. such listing on the stock market.
BitGo Alleges Galaxy's Q2 2022 Losses
BitGo soon refuted Galaxy Digital's claims, saying that the former had sent the 2021 audited returns to the latter. Quinn Emanuel, litigation partner at BitGo, said:
“It is common knowledge that Galaxy reported a loss of $550 million last quarter, that its stock is performing poorly, and that both Galaxy and Mr. Novogratz have been distracted by the Luna fiasco. Either Galaxy owes BitGo a $100 million termination fee as promised or it has been acting in bad faith and faces damages of that amount or more."
However, Galaxy Digital stated that BitGo's claims were baseless. Calling the termination of the deal "absurd," BitGo declared its intention to sue Galaxy.
In fact, Galaxy Digital had reported a net loss of $554,720 for the second quarter of 2022 according to its financial statement . The collapse of cryptocurrencies ruined every company in the world and Galaxy was no exception.
Sep 15, 2022